April 29, 1980
POLICY LETTER 80-2
TO THE HEADS
OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Regulatory
Guidance on Section 211 of Public Law 95- 507
There is
a need in Government for uniformity and consistency in the application
of procurement policy. This directive provides the uniform policy applicable
to Section 211 of Public Law 95-507. The clauses and regulatory coverage
that follow articulate this uniform policy. The Defense Acquisition
Regulations (DAR), the Federal Procurement Regulations (FPR), and the
National Aeronautics and Space Administration Procurement Regulations
(NASA PR) shall be amended to conform to this policy. This guidance
supercedes in its entirety the guidance previously published in the
Federal Register on
April 20, 1979, (44 F.R. 23610).
A. UTILIZATION
OF SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS (OVER $10,000)
The following
clause shall be included in all contracts over $10,000 except (1) contracts
for services which are personal in nature and (2) contracts which will
be performed entirely (including all subcontracts) outside any State,
territory, or possession of the United States, the District of Columbia,
or the Commonwealth of Puerto Rico:
(Clause)
UTILIZATION
OF SMALL BUSINESS CONCERNS AND
SMALL BUSINESS CONCERNS OWNED
AND CONTROLLED
BY SOCIALLY AND ECONOMICALLY DISADVANTAGED INDIVIDUALS
(a) It is the policy of
the United States that small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged individuals
shall have the maximum practicable opportunity to participate in the performance
of contracts let by any Federal agency.
(b) The contractor
hereby agrees to carry out this policy in the awarding of subcontracts
to the fullest extent consistent with the efficient performance of this
contract. The contractor further agrees to cooperate in any studies or
surveys as may be conducted by the Small Business Administration or the
contracting agency which may be necessary to determine the extent of the
contractor's compliance with this clause.
(c)
(1) As used
in this contract, the term "small business concern" shall
mean a small business as defined pursuant to section 3 of the Small Business
Act and relevant regulations promulgated pursuant thereto. (2) The term "small business concern owned and controlled by socially and
economically disadvantaged individuals" shall mean a small business concern
-
(i) which is at least 51 per centum owned by one or more socially and
economically disadvantaged individuals' or in the case of any publicly
owned business, at least 51 per centum of the stock of which is owned
by one or more socially and economically disadvantaged individuals; and
(ii) whose management and daily business operations
are controlled by one or more of such individuals.
The contractor shall
presume that socially and economically disadvantaged individuals include
Black Americans, Hispanic Americans, Native Americans, Asian-Pacific
Americans, and other minorities, or any other individual found to be
disadvantaged by the Small Business Administration pursuant to section
8(a) of the Small Business Act.
(d) Contractors acting in good faith may rely on written
representations by their subcontractors regarding their status as a small
business concern or a small business concern owned and controlled by socially
and economically disadvantaged individuals.
(End of Clause)
B. DEFINITIONS
- Business owners who certify that they are members of named groups (Black
Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans) are
to be considered socially and economically disadvantaged.
- The phrase "Native Americans" means American Indians, Eskimos, Aleuts and
native Hawaiians. The term "Asian-Pacific Americans" means U.S. citizens whose
origins are from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam,
the U.S. Trust Territories of the Pacific, Northern Marianas, Laos, Cambodia
and Taiwan.
- Other individuals may qualify as socially and economically disadvantages
under procedures which have been separately established by the Small Business
Administration at 13 CFR 124.1-1(3)(iii).
- The Office of Minority Small Business and Capital Ownership Development in
the Small Business Administration has the final authority to determine the
eligibility of a concern to be designated as a small disadvantaged business
and shall answer inquiries from prime contractors and others regarding such
eligibility.
- The term "subcontract" means
any agreement (other than one involving an employer-employee relationship)
entered into by a Federal Government prime contractor or subcontractor
calling for supplies or services required for the performance of the original
contract or subcontract.
C. SMALL
BUSINESS AND SMALL DISADVANTAGED BUSINESS SUB-CONTRACTING
(NEGOTIATED).
All solicitations
for negotiated contracts or negotiated amendments or modifications (including
contracts, amendments, and modifications placed on a sole source basis),
except those for procurements and set-asides pursuant to section 8(a) and
section 15 of the Small Business Act as amended, which individually are expected
to exceed $500,000, or in the case of contracts for the construction of any
public facility, $1,000,000, and are required to include the clause entitled
Utilization of Small Business Concerns and Small Business Concerns Owned
and Controlled by Socially and Economically Disadvantaged Individuals, shall
include a provision which requires the apparent successful offeror, provided
the offeror is not a small business concern, to negotiate a detailed subcontracting
plan. The provision is as follows:
(Provision)
SMALL BUSINESS
AND SMALL DISADVANTAGED BUSINESS
SUBCONTRACTING PLAN
(NEGOTIATED)
- This provision does not apply to small business concerns.
- The term "subcontract" means
any agreement (other than one involving an employer-employee relationship)
entered into by a Federal Government prime contractor or subcontractor
calling for supplies or services required for the performance of the original
contract or subcontract.
- The offeror
acknowledges that it is aware of the subcontracting plan requirements in
this provision; and if it is the apparent successful offeror, and if the
contract offers subcontracting possibilities, agrees to negotiate a plan
which includes:
a. Percentage goals (expressed
in terms of percentage of total planned subcontracting dollars) for the utilization
as subcontractors of small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged individuals;
(For the purposes of the sub- contracting plan, the contractor may include
all purchases which contribute to the performance of the contract, including
a proportionate share of products, services, etc., whose costs are normally
allocated as indirect or overhead costs.)
As part of its establishment of percentage goals the apparent successful
offeror shall also include in its subcontracting plan:
(1) A statement of: (a) total dollars planned to be subcontracted; (b)
total dollars planned to be subcontracted to small business; and (c)
total dollars planned to be subcontracted to small disadvantaged business.
(2) A description of the principal product and service areas to be subcontracted
and an identification of those areas where it is planned to use (i) small
business subcontractors, and (ii) small disadvantaged business subcontractors.
(3) A statement of the method used in developing proposed subcontracting
goals for (i) small business, (ii) small disadvantaged business concerns
(e.g., did the offeror use for subcontract solicitation purposes company
source lists, the small business and disadvantaged small business source
identification system provided by the Small Business Administration's
Procurement Automated Source System, the National Minority Purchasing
Council Vendor Information Service, the Office of Minority Business Data
Center in the Department of Commerce, and the facilities of local small
business and minority associations?).
(4) If the offeror includes indirect
and overhead costs as an element in establishing the goals in the subcontracting
plan, the method used in determining the proportionate share of indirect
and overhead costs incurred with (i) small business, and (ii) small disadvantaged
business subcontractors shall be explained.
b. The name of an individual within the employ of the offeror
who will administer the subcontracting program of the offeror and a
description of the duties of such individual;
c. A description of the
efforts the offeror will take to assure that small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals will have an equitable opportunity to compete for
subcontracts;
d. Assurances that the offeror will include the clause entitled
Utilization of Small Business Concerns and Small Business Concerns Owned
and Controlled by Socially and Economically Disadvantaged Individuals in
all subcontracts which offer further subcontracting opportunities and to
require all subcontractors (except small business concerns) which receive
subcontracts in excess of $500,000, or in the case of a contract for the
construction of any public facility, $1,000,000, to adopt and comply with
a plan similar to the plan agreed to by the offeror. Such assurances shall
describe the offeror's procedures for the review, approval, and monitoring
for compliance with such plans;
e. Assurances that the offeror will submit
such periodic reports and cooperate in any studies or surveys as may be required
by the contracting agency or the Small Business Administration in order to
determine the extent of compliance by the offeror with the subcontracting
plan; and f. A recitation of the types of records the offeror will maintain
to demonstrate procedures which have been adopted to comply with the
requirements and goals set forth in the plan, including the establishment
of source lists of small business concerns and small business concerns owned
and controlled by socially and economically disadvantaged individuals; and
efforts to identify and award subcontracts to such small business concerns.
The records shall include at least the following (these records may be maintained
on a plant-wide or company-wide basis unless otherwise indicated):
(1) Small and disadvantaged
business source lists, guides and other data identifying small and small
disadvantaged business vendors.
(2) Organizations contacted for small and
disadvantaged business sources.
(3) On a contract-by-contract basis, records
on all subcontract solicitations over $100,000, indicating on each solicitation
(a) whether small business was solicited, and if not why not; (b) whether
small disadvantaged business was solicited, and if not why not; and (c)
reasons for the failure of solicited small business or small disadvantaged
business to receive the subcontract award.
(4) Records to support other
outreach efforts:
- Contacts with minority and small business trade associations;
- Contacts with business development organizations;
- Attendance at small and minority business procurement conferences
and trade fairs.
(5) Records
to support internal activities to guide and encourage buyers:
- Workshops, seminars, training programs, etc.
- Monitoring activities to evaluate compliance.
(6) On a contract-by-contract basis, records to support
award data submitted to the Government to include name and address of
subcontractor.
- The offeror
understands that:
a. No contract will be awarded unless and until an acceptable plan is
negotiated with the contracting officer which plan will be incorporated
into the contract, as a material part thereof.
b. An acceptable plan
must, in the determination of the contracting officer, provide the
maximum practicable opportunity for small business concerns and small
business concerns owned and controlled by socially and economically
disadvantaged persons to participate in the performance of the contract.
c. If a subcontracting plan acceptable to the contracting officer is
not negotiated within the time limits prescribed by the contracting
activity and such failure arises out of causes within the control and
with the fault or negligence of the offeror, the offeror shall be ineligible
for an award. The contracting officer shall notify the contractor in
writing of his reasons for determining a subcontracting plan to be
unacceptable. Such notice shall be given early enough in the negotiation
process to allow the contractor to modify the plan within the time
limits prescribed.
d. Prior compliance of the offeror with other such
subcontracting plans under previous contracts will be considered by
the contracting officer in determining the responsibility of the offeror
for award of the contract.
e. It is the offeror to develop a satisfactory
subcontracting plan with respect to both small business concerns and
small business concerns owned and controlled by socially and economically
disadvantaged individuals and that each such aspect of the offeror's
plan will be judged independently of the other.
f. The offeror will submit, as required by the contracting officer,
subcontracting reports in accordance with the instructions thereon, and
as further directed by the contracting officer. Subcontractors will
also submit these reports to the government's contracting officer or
as otherwise directed, with a copy to the prime contractor's designated
small and disadvantaged business liaison.
- The failure of any contractor or subcontractor to comply in good faith
with (a) the clause entitled Utilization of Small Business Concerns and Small
Business Concerns Owned and Controlled by Socially and Economically
Disadvantaged Individuals or (b) an approved plan required by this Small
Business and Small Disadvantaged Business Subcontracting Plan (Negotiated)
provision, will be a material breach of such contract or subcontract.
- Commercial Products.
If a commercial product (defined below) is offered the required subcontracting
plan may relate to the company's production generally (both for commercial
and non-commercial products) rather than solely to the item being procured
under the government contract. In such cases, the contractor shall be required
to submit one company-wide, annual plan to be reviewed for approval by
the first agency with which it enters into a prime contract (which requires
a subcontracting plan) during the fiscal year, or by another agency satisfactory
to the contracting officer. The approved plan will remain in effect for
the company's entire fiscal year for all of the company's or division's
commercial products.
The term "commercial products" means products in regular
production sold in substantial quantities to the general public and/or
industry at established market or catalog prices. A product which, in the
opinion of the contracting officer, differs only insignificantly from the
contractor's commercial product may be regarded for the purpose of this
clause as a commercial product.
(End of Provision)
INSTRUCTIONS TO CONTRACTING OFFICERS
The following policy and procedural guidance is provided to contracting
officers in making determinations as to the acceptability of a Small Business
and Small Disadvantaged Business Subcontracting Plan (Negotiated) submitted by
an apparent successful offeror, in accordance with the requirements of Public
Law 95-507, Amendments to the Small Business Act and the Small Business
Investment Act of 1958. This guidance is not intended to be all inclusive.
Other factors may warrant consideration dependent upon the particular
circumstances of the proposed acquisition. Ultimately, there is no substitute
for the reasoned and objective judgment of a contracting officer exercised on
a case by case basis.
(a) Contracts with Options or Similar Provisions -
In the case of contracts with options, or similar provisions, requiring a subcontracting
plan, the contracting officer shall obtain a satisfactory plan prior to award
covering the basic and the option items of the contract. The price of the option
items shall be included in determining whether the contract meets the subcontracting
threshold, and the plan shall take into account the procurement of the option
items. In the event the option or similar provision is not exercised, the contractor
should not be bound by that portion of the plan relating to the option items.
(b) Letter Contracts - In the case of letter-type contracts
requiring a subcontracting plan, the contracting officer shall seek to obtain
a satisfactory plan within 90 days after award or before definitization,
whichever comes first.
(c) Acceptability of Proposed Plan -
In making determinations concerning the acceptability of a proposed subcontracting
plan, the contracting officer should take the following actions:
(1) To the
extent available, the contracting officer shall obtain the names and
locations of principal proposed (i) small business, and (ii) small disadvantaged
business subcontractors, including the type of product or service and
the dollar value thereof to be awarded to each principal subcontractor.
(This information will be used only to assist the contracting officer
in making a determination as to the acceptability of the proposed percentage
and dollar subcontract goals. The offeror will not be contractually bound
to make subcontract awards to the designated subcontractors nor will
the names of the subcontractors be included in any subsequent approved
plan).
(2) Obtain
and review information from all appropriate sources, including the prospective
contractor, contract administration activities, Small and Disadvantaged
Business Utilization Specialist, and SBA representatives concerning the
apparent successful offeror's historical performance and achievements
in placing subcontracts for the same or similar products or services
with (i) small business, and (ii) small disadvantaged business subcontractors
-- if this information is not available for a specific product or service,
the offeror's past performance and achievements in the placement of total
subcontract awards to (i) small business, and (ii) small disadvantaged
business subcontractors shall be examined.
(3) Evaluate
the anticipated potential for subcontracting to (i) small business, and
(ii) small disadvantaged business considering the make-or-buy policies
or programs of the apparent successful offeror, the nature of the products
or services to be subcontracted, and the known availability of (i) small
business, and (ii) small disadvantaged business concerns in the geographical
area where the work will be performed.
(4) Advise
the apparent successful offeror of (i) the availability of the sources
of information on potential small business and small disadvantaged business
subcontractors and (ii) the names of any known potential small business
and small disadvantaged business subcontract sources. If the proposed
goals are questionable, the contracting officer shall emphasize that
one or more of the sources of information should be used and potential
small business and small disadvantaged business subcontract sources be
considered to ensure development of realistic and acceptable goals.
(5) Obtain
advice and recommendations of the Small and Disadvantaged Business Utilization
Specialist and the assigned Small Business Administration Procurement Center
Representative (if available) concerning the acceptability of the proposed
plans.
(6) Negotiate
subcontracting goals at a level which represents a good faith, aggressive,
and comprehensive effort of the apparent successful offeror to use to
the maximum practicable extent small and small disadvantaged subcontractors
after appropriate consideration of their price, technical capability,
and other pertinent factors. No goals will be negotiated upwards if it
is apparent that such higher goals must result in significant increased
costs to the Government or will seriously impede acquisition objectives.
However, incentive subcontracting clauses should be considered in those
cases where it is believed that additional and unique prime contractor
effort could significantly increase small business and small disadvantaged
business subcontract awards.
(7) The contracting
officer shall promptly negotiate appropriate revisions to agreed subcontracting
percentage and dollar goals if any subsequent amendments to the contract
will have a major impact on the original planned volume or type of subcontracting
effort. If the agreement cannot be reached, the matter will be resolved
under the Disputes Clause of the contract. (8) In reviewing and negotiating
a contractor's proposed small and disadvantaged business subcontracting
plan, the contracting officer shall give due consideration to the contractor's "make-or-buy" policy
or program. This is necessary to ensure that the respective programs are
not in conflict, and the best interests of the Government are obtained.
Furthermore, where the contract work involves products or services which
are not generally available in the commercial marketplace or are particularly
specialized, and the contractor has current capacity to perform the work,
the contracting officer may recognize the reduced likelihood of subcontracting
opportunities.
(d) Forwarding to SBA of Plans Involving Commercial
Products
Contracting
officers receiving company-wide plans under paragraph 6 (commercial products)
of both solicitation clauses -- SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS SUBCONTRACTING PLAN (NEGOTIATED) and SMALL BUSINESS AND SMALL
DISADVANTAGED BUSINESS SUBCONTRACTING PLAN (ADVERTISED) -- shall forward
copies of such plans and approvals thereof to the Central Office of the
Small Business Administration, 1441 "L" Street, N.W., Washington,
D.C., Attention: AAPA.
(e) Failure to Comply in Good Faith with the Subcontracting
Requirements
The failure of any contractor or subcontractor to comply
in good faith with (1) the clause entitled Utilization of Small Business
Concerns and Small Business Concerns Owned and Controlled by Socially and
Economically Disadvantaged Individuals, or (2) an approved plan required
by the Small Business and Small Disadvantaged Business Subcontracting Plan
provision, will be a material breach of such contract or subcontract.
If
such a breach has occurred in the prime contract, the contracting officer
shall review the available facts to determine what remedy is in the best
interests of the Government.
Such remedies
may include Termination of the Contract pursuant to the Termination for
Default Clause, negotiated reduction in contract price, negotiation of
a revised subcontracting plan to correct deficiencies, or other negotiated
measures the contracting officer may deem appropriate. In determining the
proper remedy, the contracting officer shall consider as a minimum (1)
the reasons attributed to the failure to comply in good faith, (2) the
Government's need for the contract deliverables, and (3) the impact a proposed
remedy may have on existing small and disadvantaged subcontractors.
If
the failure to comply in good faith cannot be settled by agreement, a contracting
officer decision pursuant to the contract disputes clause shall be issued.
D. INCENTIVE SUBCONTRACTING
PROGRAM.
The following
clause may be used in negotiated contracts for which a subcontracting plan
is required.
(Clause)
INCENTIVE
SUBCONTRACTING PROGRAM FOR SMALL BUSINESS
AND SMALL
DISADVANTAGED BUSINESS (NEGOTIATED)
(1) The contractor has established, in its subcontracting plan, the
following goals for awards to small business and small disadvantaged business
concerns:
(i) ____* percent of the total planned subcontract amount of $ ____* to
small business concerns, and
(ii) ____**
percent of the total planned subcontract amount of $ ____** to small
business concerns owned and controlled by socially and economically disadvantaged
individuals.
(2) To the extent that the contractor exceeds such subcontract
goals in the performance of this contract, it will receive ____*** percent
(not to exceed 10 percent) of the dollar amount of such excesses, unless the
contracting officer determines that such excess was not due to efforts by the
contractor, i.e., subcontractor costs in excess of those contractually agreed
upon or where the actual subcontract amount exceeds that estimated in the subcontract
plan; or planned subcontracts which were not disclosed in the subcontract plan
during contract negotiation.
(3) If the
contract is a cost plus fixed fee type, the total of the fixed fee and
the incentive payments made pursuant to this clause is subject to the limitations
set forth in FPR 1-3.405-5(c)(2) and DAR 3-405.6(c)(2).
_______________
*, ** Identified
elsewhere in the contract.
*** Exact percentage
to be inserted into the contract document.
(End of Clause)
E. SMALL BUSINESS AND SMALL
DISADVANTAGED BUSINESS SUBCONTRACTING (ADVERTISED).
All solicitations
for formally advertised contracts or amendments or modifications thereto
which, except those for procurements and set-asides pursuant to section 8(a)
and section 15 of the Small Business Act as amended, offer subcontracting
opportunities and are expected to exceed $500,000, or in the case of contracts
for the construction of any public facility, $1,000,000, and are required
to include the clause entitled Utilization of Small Business Concerns and
Small Business Concerns Owned and Controlled by Socially and Economically
Disadvantaged Individuals, shall include a provision which requires the bidder
selected to be awarded the contract, provided the bidder is not a small business
concern, to submit a detailed subcontracting plan.
The contracting
officer shall include the solicitation notice below in all solicitations
meeting the monetary threshold unless the contracting officer determines
in writing that the proposed contract, amendment or modification, offers
no subcontracting possibilities. If the contracting officer is not sure of
the presence of subcontracting possibilities, the notice must be included;
but the requirement to furnish a plan may be omitted on a showing by the
bidder selected for award that subcontracting possibilities do not exist.
The provision is as follows:
(Provision)
SMALL BUSINESS
AND SMALL DISADVANTAGED BUSINESS
SUBCONTRACTING PLAN
(ADVERTISED)
- This provision does not apply to small business concerns.
- The term "subcontract" means
any agreement (other than one involving an employer-employee relationship)
entered into by a Federal Government prime contractor or subcontractor
calling for supplies or services required for the performance of the original
contract or subcontract.
- The bidder acknowledges that it is aware of the subcontracting plan
requirement in this provision; and if selected for award, will submit within
the time specified by the contracting officer a subcontracting plan that will
afford the maximum practicable opportunity to participate in the performance
of the contract to small and small disadvantaged concerns, and will include:
a. Percentage goals
(expressed in terms of percentage of total planned subcontracting dollars)
for the utilization as subcontractors of small business concerns and small
business concerns owned and controlled by socially and economically disadvantaged
individuals; (For the purposes of the subcontracting plan, the contractor
may include all purchases which contribute to the performance of the contract,
including a proportionate share of products, services, etc., whose costs
are normally allocated as indirect or overhead costs.)
As part of its establishment of percentage goals the apparent successful
bidder shall also include in its subcontracting plan:
(1) A statement of: (a) total dollars planned to be subcontracted; (b)
total dollars planned to be subcontracted to small business; and (c)
total dollars planned to be subcontracted to small disadvantaged business.
(2) A description of the principal product and service areas to be
subcontracted and an identification of those areas where it is planned
to use (i) small business subcontractors, and (ii) small disadvantaged
business subcontractors.
b. The name of an individual within the employ of the bidder who
will administer the bidder's subcontracting program and a description of
the duties of such individual;
c. A description
of the efforts the bidder will take to assure that small business
concerns and small business concerns owned and controlled by socially
and economically disadvantaged individuals will have an equitable
opportunity to compete for subcontracts;
d. Assurances
that the bidder will include the clause entitled Utilization of Small
Business Concerns and Small Business Concerns Owned and Controlled
by Socially and Economically Disadvantaged Individuals in all subcontracts
which offer further subcontracting opportunities and to require all
subcontractors (except small business concerns) which receive subcontracts
in excess of $500,000, or in the case of a contract for the construction
of any public facility, $1,000,000, to adopt and comply with a plan
similar to the plan agreed to by the bidder;
e. Assurances
that the bidder will submit such periodic reports and cooperate in
any studies or surveys as may be required by the contracting agency
or the Small Business Administration in order to determine the extent
of compliance by the bidder with the subcontracting plan; and
f.
A recitation of the types of records the successful bidder will maintain
to demonstrate procedures which have been adopted to comply with
the requirements and goals set forth in the plan, including the establishment
of source lists of small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged individuals;
and efforts to identify and award subcontracts to such small business
concerns. The records shall include at least the following (these
records may be maintained on a plant-wide or company-wide basis unless
otherwise indicated):
(1) Small and disadvantaged
business source lists, guides and other data identifying small and small
disadvantaged business vendors.
(2)
Organizations contacted for small and disadvantaged business sources.
(3)
On a contract-by-contract basis, records on all subcontract solicitations
over $100,000, indicating on each solicitation (a) whether small
business was solicited, and if not why not; (b) whether small disadvantaged
business was solicited, and if not why not; and (c) reasons for
the failure of solicited small business or small disadvantaged
business to receive the subcontract award.
(4)
Records to support other outreach efforts:
- Contacts with minority and small business trade associations,
- Contacts with business development organizations,
- Attendance at small and minority business procurement conferences
and trade fairs.
- The bidder understands that:
(a) It agrees to carry out the government's policy to provide the
maximum practicable opportunity for small business concerns and small
business concerns owned and controlled by socially and economically
disadvantaged individuals to participate in the performance of the
contract, consistent with its efficient performance.
(b) If it
does not submit a subcontracting plan within the time limits prescribed
by the contracting agency, it will be ineligible to be awarded the
contract.
(c) Prior
compliance of the bidder with other such subcontracting plans under
previous contracts will be considered by the contracting officer in
determining the responsibility of the offeror for award of the contract.
(d) It is
the bidders responsibility to develop a subcontracting plan with respect
to both small business concerns and small business concerns owned and
controlled by socially and economically disadvantaged individuals and
that each such aspect of the plan will be judged independently of the
other.
- The failure of any contractor or subcontractor to comply in good faith
with (a) the clause entitled Utilization of Small Business Concerns and Small
Business Concerns Owned and Controlled by Socially and Economically
Disadvantaged Individuals or (b) the terms of any subcontracting plan required
by this Small Business and Small Disadvantaged Business Subcontracting Plan
(Advertised) provision, will be a material breach of the contract or
subcontract.
- Commercial Products.
If a commercial product (defined below) is offered the required subcontracting
plan may relate to the company's or division's production generally (both
for commercial and non-commercial products) rather than solely to the item
being procured under the government contract. In such cases, the contractor
shall be required to submit one company-wide, annual plan to be reviewed
for approval by the first agency with which it enters into a prime contract
(which requires a subcontracting plan) during the fiscal year, or by another
agency satisfactory to the contracting officer. The approved plan will
remain in effect for the company's entire fiscal year for all of the company's
or division's commercial products.
The term "commercial products" means
products in regular production sold in substantial quantities to the general
public and/or industry at established market or catalog prices. A product
which, in the opinion of the contracting officer, differs only insignificantly
from the contractor's commercial product may be regarded for the purpose
of this clause as a commercial product.
(End of Provision)
INSTRUCTIONS TO CONTRACTING OFFICERS
(a) Informational Goals.
The contracting officer may, in a letter accompanying the solicitation or otherwise,
inform the offeror of the goal the Government contemplates for subcontracting
to both small business concerns and small business concerns owned and controlled
by socially and economically disadvantaged individuals. Any such letter shall
state that the goals are informational only and not legally binding.
(b) Notification of Unsatisfactory Plans.
If the contracting officer believes that the subcontracting plan submitted
pursuant to this section does not reflect the best effort by the bidder to
award subcontracts to small and small disadvantaged firms to the fullest
extent consistent with the efficient performance of the contract, he shall
notify the agency's director of the Office of Small and Disadvantaged Business
Utilization who shall in turn notify the Small Business Administration
and request a review of the plan pursuant to Section 8(d)(10) and (11)
of the Small Business Act. Such request for an SBA review shall not delay
award of the contract. Prior compliance of the bidder with other such subcontracting
plans under previous contracts will be considered by the contracting officer
in determining the responsibility of the bidder for award of the contract.
(c) Forwarding to SBA of Plans Involving Commercial Products.
Contracting officers receiving company-wide plans under paragraph 6 (commercial
products) of both solicitation clauses -- SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS SUBCONTRACTING PLAN (NEGOTIATED) and SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS SUBCONTRACTING PLAN (ADVERTISED) -- shall forward copies of such
plans and approvals thereof to the Central Office of the Small Business Administration,
1441 "L" Street, N.W., Washington, D.C.,
Attention: AAPA.
EFFECTIVE
DATE: This Policy
Letter is effective June 1, 1980.
CONCURRENCE: This
Policy Letter has been concurred in by the Director of OMB.
Karen H. Williams
Administrator
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